EUR/JPY extends the side-lined mood above 130.00

• EUR/JPY adds to Monday’s small uptick near 130.50.
• Higher US yields prop up the dollar and weighs on the yen.
• German, EMU Economic Sentiment disappointed in September.

The continuation of the weekly recovery in the greenback puts the Japanese currency under pressure and motivates EUR/JPY to extend the recovery from last Friday’s lows in the 130.20/15 band.

EUR/JPY bid on US yields

EUR/JPY now advances for the second session in a row and keeps unchanged the multi-session consolidation above the psychological 130.00 hurdle so far on turnaround Tuesday.

In the meantime, US markets are expected to gradually return to the normal activity after Monday’s Labor Day holiday. Against this, yields of the key US 10-year benchmark rebound to multi-day highs past the 1.36% mark, which in turn sustain the current upside momentum surrounding the dollar.

In the data space, Japan’s preliminary figures for the Coincident Index and the Leading Economic Index came in at 94.5 and 104.1, respectively, for the month of July. Further results in July noted the Household Spending expanded at an annualized 0.7% and contracted 0.9% from the previous month.

Closer to home, the German Industrial Production expanded at a monthly 1.0% during July and the Economic Sentiment tracked by the ZEW survey receded to 26.5 in September (from 40.4). In the broader euro area, revised Q2 GDP figures showed the economy is now expected to expand 2.2% QoQ and 14.3% YoY. Further results in the bloc saw the Economic Sentiment at 31.1 (from 42.7).

EUR/JPY relevant levels

So far, the cross is gaining 0.10% at 130.46 and a surpass of 130.74 (monthly high Sep.3) would expose 131.08 (100-day SMA) and then 131.75 (61.8% Fibo of the June-August drop). On the downside, the next support comes in at 130.05 (55-day SMA) seconded by 129.38 (monthly low Aug.19) and finally 127.93 (monthly low Aug.19).